To secure your financial future, you need to consistently make good financial decisions.
While some of these decisions may be small, many others will be complex and carry consequences that could significantly impact your financial future.
Some people are able to make complicated financial decisions on their own; however, many of us need help and guidance when making important financial choices.
Financial advisors are professionals that will bring knowledge and perspective to your financial decision making, helping you avoid any blind spots to make informed decisions regarding your finances.
What’s more, households that partner with financial advisors are better off financially than households that don’t. In this post, we’ll explore three key reasons why you should consider working with a financial advisor.
What do financial advisors do?
Financial advisors improve their clients’ financial outcomes by providing specialized guidance. Simply put, a financial advisor can help you identify your financial goals, develop a plan and work with you to put your plan into action.
Financial advisors can help you with:
- Planning for retirement
- Increasing your monthly savings contributions
- Tackling debt
- Insurance and tax planning
An advisor helps you determine how much money and resources you have now, how much you’ll need in the future and how you can strategically grow your wealth.
- Financial advisors can help you see your entire financial situation
Do you ever think about buying an investment property or owning a new home in the future?
Perhaps you want to start your own company, pay for your child’s education or build a portfolio that generates a healthy stream of dividends long into your retirement.
These financial goals come with a “cost” and a financial advisor can help you:
- Define and prioritize your goals and understand trade-offs
- Identify the links between your goals
- Develop strategies to reach your goals based on your available resources
Financial advisors construct frameworks for their clients that organize all the pieces of their financial situations. Furthermore, they help clients balance competing priorities and assist with determining the most efficient strategies to reach their goals.
With so many decisions to make, financial planning can be overwhelming. Advisors have expertise in cutting through the fog to help you identify which goals matter most to you and recommend the right tools, products and information to help you achieve your goals. Ultimately, this saves clients time and increases client confidence regarding their ability to build their future.
- Financial advisors can help you reduce your financial risk
As our lives progress our exposure to risk increases.
For example, our health deteriorates, we may have more dependents, the job market may evolve, and we may find ourselves out of work or our investment style may have changed.
Often, we’re so busy with our day-to-day lives that we don’t notice a problem emerging before it’s too late.
A financial advisor can help you understand your own unique risk profile and suggest risk mitigation strategies to ensure you and your family are protected from unforeseen events or problems. For some, this might include purchasing a comprehensive insurance plan; for others, it might involve developing a hedging strategy to reduce the downside risk of an aggressive growth portfolio.
Throughout life we all experience life changing events, whether it’s having a child, landing a career changing job or inheriting money. Financial advisors can act as risk coaches at various turning points in your life, ensuring you’re proceeding with the appropriate caution.
- Financial advisors can help you build wealth faster
A growing body of research suggests that households using financial advisors are more disciplined savers and have better financial outcomes in the long run in comparison to households that don’t use one.
Generally, the longer you work with an advisor, the better off you’ll be. After 15 years or more of working with a financial advisor, advised households can accumulate as much as 173% (2.73 times) more assets than otherwise identical non-advised households (The Investment Funds Institute of Canada, 2012). Advised households also tend to have more RRSPs and Tax Free Savings Accounts in comparison to their non-advised counterparts.
When asked, 61% of investors strongly agreed that their advisor helped them increase their net worth and achieve investment returns (Investment Funds Institute of Canada, 2011). These facts and statistics support the hypotheses that financial advisors:
- Provide valuable advice that enhances client decision making
- Develop meaningful financial plans that help their clients save money and increase their net worth
- Act as financial educators, informing their clients about important financial products
Your financial advisor can help you develop creative strategies to grow your wealth and alert you to investment vehicles and opportunities that you may not have been aware of.
When you work with a financial advisor, you benefit from their skills, knowledge and perspective. Your advisor will guide your financial planning and decision making which will have a positive impact on your financial health and well-being.
Interested in starting a career with Canada Financial? Join us at our next Carrer Webinar.